U.K. stocks drifted lower on Wednesday amid signs of rising U.S.-China tensions after reports suggested that U.S. President Donald Trump's top advisers weighed proposals to undermine the Hong Kong currency's peg to the U.S. dollar in a bid to punish banks in Hong Kong.
Investors also awaited Chancellor Rishi Sunak's "summer statement", a sort of mini-Budget in which he is expected to announce schemes to aid the economy's battle against a Covid-19 downturn.
The benchmark FTSE 100 dropped 22 points, or 0.35 percent, to 6,167 after falling 1.5 percent in the previous session.
HSBC Holdings, which draws more than two-thirds of its pretax income from Hong Kong, tumbled 4 percent.
BP Plc fell and Royal Dutch Shell fell around 1 percent as oil recouped earlier losses to trade on a flat note amid oversupply fears.
FirstGroup shares plunged 13 percent after the company reported a £300m loss and withdrew its dividend for the year to March.
In economic releases, U.K. hiring activity continued to fall in June as clients continued to freeze or cut back on their recruitment plans due to the coronavirus pandemic, the Report on Jobs compiled by IHS Markit showed.
Both permanent staff placements and temporary billings decreased at notably weaker rates than in April and May when the covid-19 pandemic was at its most severe. However, rates of contraction remained sharp.
According to KPMG/REC report, the availability of workers grew at the fastest pace since 2009 due to increased redundancies and workers who were on furlough started seeking new jobs.
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